Chris Lombardi puts defense and security under the spotlight, as he shares his takes on recent NATO and EU cooperation and provides insight into the company’s own long-term strategic partnerships in Europe.

Three trends are currently driving the global electricity sector: decarbonization, decentralization and differentiation. Utilities are making significant contributions to mitigate carbon emissions, while a technology revolution is …

The Gas Man

One of the most ardent campaigners against European economic nationalism is Wulf Bernotat, chairman and CEO of Germany’s largest power company, E.ON. Active on all fronts, Bernotat has become something of a rent-a-quote, eager to speak out against the backwardness of protecting energy markets ever since the Spanish government attempted to block E.ON’s 29.1 billion euro cash bid for national electricity company Endesa in February, favouring a lower bid from Gas Natural.

It’s a familiar story. Government acts as matchmaker for national energy champions in an attempt to ward of foreign suitors; big daddy, the European Commission, weighs in with threats of court action; everyone gets a bit hot under the collar. But there, the similarity with the Elysée-backed Suez-Gaz de France merger ends. While the Italian Enel has remained fairly discreet in the wake of its thwarted bid for French utility company Suez, E.ON’s Bernotat seems to have launched his own one-man-campaign, not only against national protectionist instincts, but also against EU fears over the growing power of Russian energy giant Gazprom. “They have got the stuff we want and need,” Bernotat told reporters last month. “I find the Gazprom supply debate completely exaggerated and over-blown. It is, to be frank, absolute nonsense.”

Bernotat’s interest in the wider market is unsurprising, given recent collaboration between E.ON and Gazprom, along with German chemicals firm BASF, on the controversial gas pipeline, planned for 2010, which will link Germany with Russia under the Baltic Sea. Last month Bernotat spoke of his continental ambitions for E.ON, likening Endesa to a Trojan horse that would enable E.ON to break the hermetic French energy sector from the inside – Endesa has a stake in French generator Snet and is active in the supply chain. But others wonder if the merger between E.ON and Endesa will go on to act as a Trojan horse for Gazprom in Europe.

Bernotat was born in Göttingen, Germany, in 1948. He is married with two children and has had something of a model career, mostly spent in the energy sector. He studied law at the University of Göttingen, obtaining a doctorate in cartel law in 1976. From there, he went on to spend 19 years at Shell, initially as a legal adviser before switching to corporate management. Having worked his way up to the board of management, he spent four years at E.ON’s predecessor company Veba, at the time one of two holding companies for state-owned mining and electricity businesses.

He left the energy business in 2001 to take the helm of Stinnes, an unprofitable logistics company, which he managed to turn around in the two years spent there – a tour de force which earned him high praise, paving the way to his current position at E.ON. “I think he is a strong leader, very strategic. He has always had the vision of where he wants to go in the market and is not doing too badly on this,” says Claudia Kemfert, director of energy research at the German Institute for Economic Research in Berlin.

“He was well-known at that time as a CEO with very precise targets, which were achievable, but nevertheless challenging,” says Nils Machemehl, energy analyst at investment bank M.M. Warburg in Hamburg. “After he took over the job [at Stinnes], he gave mid-term targets and improved profitability greatly. At E.ON, he started similarly. He went through the group and analysed all areas and business units, set a direction, announced a clear strategy. He looked at the group for half a year then implemented his strategy and targets.”

But things have not always gone Bernotat’s way. “Of course, he has his weak points,” says a German financial journalist, pointing to recently deadlocked negotiations with Gazprom. E.ON had its eye on a 25% stake in the Siberian Yuzhno-Russkoye gas field, a key source of gas for the planned Baltic pipeline, which is planned for 2010. “The move would have given E.ON sufficient reserves to supply the whole of Germany for five years,” he says.

Rumour has it that the deal, which had been under negotiation for two years, fell flat because of Bernotat’s reluctance to offer Gazprom a stake in E.ON. Despite vociferous criticism of the EU’s reluctance to allow Gazprom a further share in the EU market, Bernotat, according to the financial journalist, “didn’t want to open the way for Gazprom in Germany”. Last month E.ON denied the asset-swap rumours maintaining that negotiations dealt purely with striking a deal over a stake in the gas field. In the end, Gazprom found a more willing partner in BASF, obtaining access to the latter’s German gas distribution network in return for the coveted share of Yuzhno-Russkoye.

E.ON, it seems, will not be playing the role of Trojan horse for Gazprom – certainly not if Bernotat has anything to with it. And, resting easy in his big house in Essen, which used to belong to the Thyssen Krupp family, he certainly will not be losing sleep over the failed deal. Bernotat has every reason to be optimistic about E.ON’s future since the European Commission approved its bid for Endesa in April. The latter is looking increasingly ill-equipped to withstand E.ON’s advances and the Spanish government, which faces European Court of Justice action, is in no position to block the deal.

The merger with Endesa would create one of the world’s largest energy companies, serving more than 50 million clients in 30 countries. “As far as I know, E.ON have prepared it [the bid] very carefully, says a reporter for a Frankfurt-based financial daily. “I think E.ON has the support of Endesa’s management behind closed doors. I would be surprised if the deal doesn’t close this year.”